MannKind vows to press on with insulin inhaler
MannKind Corp. pledged Monday to continue developing its insulin inhaler system even though its stock fell after Eli Lilly & Co. said last week that it had given up on a similar diabetes treatment.
The Valencia biotech firm’s president said MannKind stock, which has lost more than two-thirds of its value in the last year, would bounce back once investors realized its product was superior to the one Lilly had been pursuing.
“We’ve been affected by an ongoing flu in the inhaler market, but we’re confident that we’ll come out of this with flying colors,” President Hakan Edstrom said in an interview.
Lilly announced its decision Friday, saying it was abandoning its inhaler program during late-phase trials because it had doubts about the commercial and clinical potential. In October, Pfizer Inc. pulled its Exubera inhaler, the only such product to reach the market, after poor sales. And in January, Novo Nordisk canceled development of its inhaler, saying it didn’t deliver insulin any better than an injection.
MannKind’s stock dropped 23% on Monday to a record $4.25 low from Friday’s close of $5.52, ending the day at $4.99, down 9.6%.
Its shares are off 67% since March 2007, in part because of a general downturn in biotech stocks. Analysts said another reason was that MannKind hasn’t yet paired with a pharmaceutical company to pursue its inhaler program.
Jeffries & Co. analyst Salveen Kochnover on Monday lowered her rating on MannKind to “underperforming” from “buy,” sending a note to investors that said Lilly’s exit was a “clear signal that the inhaled insulin market may not be commercially feasible.”
MannKind’s Technosphere insulin and Medtone inhaler are in the final phase of clinical trials. Unlike the system discontinued by Pfizer, Edstrom said, MannKind’s delivers a higher quality of insulin and the inhaler itself is smaller and more convenient.
“People are looking at all the inhalers as one family without a clear understanding that we have a very different product.” he said.
He said that MannKind’s system fell victim to the market’s general skepticism about inhaled insulin products, which some have viewed as threatened by the smaller, less-painful injectors that have come on the market in recent years.
Trials suggest that MannKind’s insulin can mimic the insulin response of a healthy individual within 15 minutes, without a high risk of hypoglycemia or the weight gain associated with insulin shots, Edstrom said. Other inhalers have a 45- to 60-minute lag, he said.
Technosphere has “substantial opportunity” among many diabetics, said Leerink Swann analyst Aileen Salares, who predicted $1 billion in revenue for MannKind by 2015. The company has said it hopes Technosphere and Medtone will be on the market by 2010.
“The discontinuation of the other products doesn’t affect MannKind,” said Salares, who rates the stock “overperforming.” “We still think this is a viable product.”
Salares added that MannKind needed “to find a partner who shows their commitment to the product and is willing to put in the investment and promotion. When that doesn’t come, people will start selling off.”
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